* FTSE 100 up 0.3 pct on the day, 2.5 pct for the week
* Vodafone buoyed by bid speculation when VZW deal completed
* Analysts reckon index will hit a record high soon
By Joshua Franklin and Sudip Kar-Gupta
LONDON, Feb 21 Britain's benchmark share index
rose on Friday and was set for its steepest weekly gain since
December, as bid speculation around index heavyweight Vodafone
led the market higher.
Mobile operator Vodafone rose 2.4 percent to 235.2 pence
after both BofA Merrill Lynch and UBS called it a potential bid
target once it sells its stake in U.S. mobile phone company
Speculation about a takeover has been going on for several
months, however, and some doubted one was likely, although they
still thought Vodafone was a stock worth holding.
"We don't rate the bid prospects as high, but we still think
there's value in Vodafone," said SVM Asset Management managing
director Colin McLean.
Vodafone added the most points to the FTSE, and
traders said the payout to shareholders from the Verizon deal
should boost the broader UK stock market in the coming weeks.
"Obviously, the return of cash is going to provide some
stimulus to the market," said Cavendish Asset Management fund
manager Paul Mumford.
The FTSE was up by 22.47 points, or 0.3 percent, at 6,835.46
points in late trading, for a gain of almost 7 percent from an
early February low. That put the blue-chip index on track for a
weekly advance of around 2.5 percent, its steepest weekly rise
"The market is reasserting its strength, and I am inclined
to follow it," said Valerie Gastaldy, head of technical analysis
firm Day-By-Day, adding that the FTSE should soon be
heading to its all-time high of around 6,950 points.
State-owned lender Royal Bank of Scotland also rose
as analysts welcomed reports that the bank will cut staff by up
to a quarter, which could help lower its costs.
"The government sell-off of Royal Bank feels a little way
off, but if this is as radical as we think it's going to be,
then I think it'll help in that process," said Numis analyst
Shares in housebuilder Persimmon gained 2 percent,
as JP Morgan analysts tipped the sector to continue to benefit
from a pick-up in the UK housebuilding industry.
Aerospace group BAE Systems also rose 3.1 percent,
recovering slightly after an 8.3 percent loss in the previous
session, when it warned of a drop in earnings this year.
The FTSE, which rose 14.4 percent in 2013 to post its best
annual gain since 2009, is up 1.3 percent since the start of